The American Senate and Chamber both envisage that bills create a regulatory framework for stablecoins, and all the usual crypto-skeptical cooling has been sung, including the hymn that crypto is for crime.
For example, senator Elizabeth Warren (D-MA) warned that the Senate engineering law “will overcome the financing of terrorism”. During the debate on the stable act of the Chamber, the representative Brad Sherman (D-CA) was worried about the use of anti-flaw portfolio provisions “.
Unsurprisingly, the genius and stable acts include important sections on illegal finance, including the submission of stable transmitters to the Bank Secrecy Act (BSA). However, legislators must ensure that the anti-flow of bills of bills do not open the door to without obstacle financial monitoring of stablecoin users.
Stablecoins are cryptographic tokens that are set at the value of another asset, such as the US dollar. The general idea is that the stable value of these tokens will promote their use as a digital exchange support. Stablecoins can be considered both as an improvement in existing payment rails and as a means of bringing the US dollar “on chain”. In other words, stablecoins are an upgrade from the 21st century to Cash. The Senate and the Chamber have both advanced bills that would create a regulatory regime for “authorized stable emitters” was partially aimed to ensure that stablecoins are, in fact, stable.
But these days, conversations on the dollar, financial services and crypto seem to go hand in hand with conversations on illicit finance prevention. The BSA requires financial institutions to help federal agencies to detect and prevent money laundering and other crimes, among other things, to keep transactions and report to government. The law on engineering and the stable law tackles illicit financing problems by clearly declaring that an authorized stable issuer “will be dealt with as a financial institution for the end of the Bank’s Secret Act.”
The appointment of a stable transmitter as a financial institution is relatively not controversial. Put aside the question of whether the BSA is a means (or constitutional) to manage illicit financial risks, the authorized Stablecoin issuers are very similar to other entities, such as banks and trusted companies, which are already financial institutions of the BSA. But it’s not that simple.
The BSA monitoring framework forces financial institutions to “know their customers” and to monitor the transactions taking place by the institution. However, such monitoring does not extend to the transactions which take place between individuals without the involvement of an institution. For example, the BSA does not apply when species change hands between two people, allowing individuals to transform into private.
If it is impossible to follow cash transactions in the manner prescribed by the BSA, the stablecoins can be followed on a blockchain when they move between the holders, even when the transfers occur between the wallets which are without ditches by intermediaries. This characteristic is tempting for those who wish to extend the surveillance of the BSA beyond its already expansive borders (and constitutionally informed).
Basically, digital asset transactions that are truly between peers should not be subjected to greater government surveillance than cash transactions. The application of anti -breasting arrangements on money laundering to portfolios without pits – which are more closely similar to physical portfolios holding species than bank accounts – would be a massive expansion of financial surveillance and unwanted intrusion into the capacities of Americans to order their financial life outside the eyes of the government.
Engineering and stable acts clearly indicate – to various degrees – that stablecoin issuers must have customer identification programs only for customers who hold accounts “with the authorized stable payment issuer” (Genius) or who are “initial holders” of a stable payment (stable).
But the other BSA requirements that invoices would impose on stablecoin issuers, in particular by maintaining the anti-whiteness-compliance programs, the retention of stable transactions, monitoring and declaration of suspicious activity, are not so clearly limited. This leaves the door open to the taxation of broader surveillance needs on stablecoin transactions which take place far from the issuer, which would be a major encroachment on the rights of Americans to transform into private.
Fortunately, the sponsors of the two bills seem to read the surveillance obligations closely. Representative Bryan Steil (R-WI), one of the sponsors of the stable act, explained during the increase in the bill according to which requiring the surveillance of the BSA of “each self-centered portfolio” would be “a dramatic invasion of personal freedom” and that “the Americans should not be treated in the same way as financial institutions”. And Senator Bill Hagerty (R-TN), one of the sponsors of the Act on Engineering, said during the increase in this bill that “[r]Equivalent transmitters to monitor transactions on various blockchains would be expensive and. . . takes time. “
This feeling concerning the scope of the obligations of the imposed BSA must be clearly reflected in the text of the two bills to permanently close the door to larger future interpretations.
Despite the characterizations of certain skeptical members of the Congress, the preservation of privacy is not simply a gift for criminals. Easy access to the government to financial information presents risks to all, in particular those who have unpopular political opinions or anyone else in minority. Such supervision is in contradiction with the rights of free persons (including the rights recognized in the American Constitution) to live without unjustified government supervision.
A step to ensure that these rights are no longer violated is to guarantee that the legislation on stabrisons considered to be unequivocally protects from the supervision of the stables of surveillance which occur without financial intermediary.
